Exploring Telecom Growth in the Cloud over Africa

The fog is lifting and the future of Cloud Computing for telecom companies is bright. And nowhere is Cloud’s potential impact on driving telecom business more relevant than in Africa. 

Cloud computing is no longer just about making IT more efficient and effective. Cloud is seen by business executives generally – and telecom managers in particular -- as a key to accelerating revenue growth, both organically and into adjacent markets that had previously been outside the purview of telecom. 

Nearly 65 percent of telecom industry respondents to a global survey¹ indicated that Cloud adoption was a high priority for their entire organizations, not just the IT group. Globally, telecoms are jumping headfirst into the Cloud marketplace, either by offering managed storage and other Cloud solutions as a complement to their traditional communications portfolios or by creating new services that they can quickly activate and monetize for a populace hungry for data. 

For instance, Safaricom, a communications service provider (CSP) in Kenya, has announced it would use its Cloud capabilities to host its Mpesa mobile money service in Africa, rather than rely on off-shore hosting facilities. Numerous other CSPs are launching or exploring the feasibility of similar Cloud-based services throughout the emerging world – especially in Africa. 

The prevalence of mobility and the lack of legacy IT infrastructure make Africa an ideal launching pad for innovative Cloud-based services. The second largest and fastest growing regional mobile phone market in the world, with more than 650 million subscribers, Africa has created large, loyal customer bases for numerous CSPs. Those customers, already more comfortable than many developed market consumers in using mobility for commerce, offer CSPs opportunities to develop new services and  revenue streams that can match the desires and preferences of increasingly-sophisticated mobile users. 

Banking on the Cloud for Growth 

Consider Airtel, which has a presence in 18 African countries where it is rapidly deploying new services. Last year, Airtel Madagascar and Movirtu agreed to offer “cloud phone” services – including mobile payment and information features – to rural residents who would otherwise not have access to advanced communications. These consumers may never own a PC – or even have regular access to electricity – but can access vital commercial and informational services via rechargeable mobile devices. 

The buzz in Africa is that leading CSPs may soon apply for banking and other licenses - and why not? With Cloud-centric capabilities, CSPs can deal directly with consumers rather than merely serving as the “pipe” for financial and other institutions. Smart CSPs will be exploring and entering adjacent markets – retail e-commerce, healthcare, Machine-to-Machine, farming information – that Cloud can facilitate much more easily than individualized data centers, which are typically expensive to maintain and service in most parts of Africa.

Some service providers seem destined to go it alone, forsaking partners to try their own hand at mobile banking and healthcare. But based on our experience helping other companies adapt and exploit new market opportunities, we believe a better route would involve CSPs integrating with like-minded experts in relevant, related industries (e.g. Banking, Healthcare, Utilities) as a way to smooth the route and provide faster development of new revenue streams. 

Less aggressive CSPs also run the risk of losing market share and adjacent market opportunities to traditional competitors as well as  the over-the-top (OTT) players (such as those that provide streaming movies and videos and various social channels)  who are eager to leverage their global brands and cavalierly pursue new revenue sources – like mobility in Africa. 

What is clear is that the fog has lifted on Cloud, shining a light of profitable hope that is likely to invigorate the telecom industry in Africa  – and beyond.

¹ The natural fit of Cloud with Telecommunications, IBM Institute for Business Value, 2012

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